More may be merrier, but it's not necessarily cheaper. The Office of Group Benefits, the state office that provides health insurance to state employees and retirees, last year joined a multi-state effort to get better drug prices through strength in numbers.

But the private entities that decide who pays what for prescription drugs were unimpressed. Canadian pharmacies, meanwhile, are more than happy to give Americans a better deal, though Uncle Sam doesn't like it.

Group Benefits joined sister agencies in seven states to find out whether combining their enrollee pools would give the states more muscle in negotiating drug prices with Pharmacy Benefit Managers, private firms that contract with health plans or health plan sponsors to administer prescription drag programs.

The band of eight states, dubbed "RXIS" for "Rx issuing states," wanted to know if its nearly 1.5 million-strong combined membership would produce substantially lower drug costs due to increased buying power.

It wouldn't.

Kip Wall, CEO of Group Benefits, said RXIS solicited bids from some of the largest pharmacy benefits managers in the country. The conclusion was that as few as 100,000 "lives" will get you big discounts, though concentrating more people in the same pool doesn't result in more savings.

"If you have a million lives it doesn't really matter. Ultimately doctors are going to determine utilization because they're the ones that write the scrips. It's not a kick at the doctors, that's just the way it works."

Howdy neighbor

This rude awakening has caused Group Benefits and RXIS to explore other options for lowering drug costs, including buying pharmaceuticals from Canada. Group Benefits is not advocating the move just yet but is waiting to see what the new governor's position on the issue will be, Wall says.

Ed Pratt, press secretary for Gov.-elect Kathleen Blanco, said last week it was too soon to comment.

The Federal Drug Administration has warned that buying drugs from Canada is against the law, though that hasn't stopped several states and cities from actively looking for ways to do just that. Drug imports from Canada already are a multimillion-dollar business as millions of Americans flout the law in search of more affordable medicine.

Federal authorities recently slapped down a request by the state of Illinois to launch a Canadian drug-buying pilot project. The government argues that it can't guarantee the safety of imported drugs, hence its refusal to allow the practice. The city of Springfield, Mass., dabbling in illegally imported Canadian drugs, was the subject of an FDA sting operation.

Meanwhile Pfizer, the world's largest drug manufacturer, has clamped down on sales of its products to Canadian pharmacies to try to stem the flow of imports to U.S. customers.

Waiting for Blanco

Wall says fears about drug safety, counterfeiting or mislabeling shouldn't be discounted but that such issues could easily be addressed through rigorous procurement methods. He guesses that importing drugs from Canada could save Louisiana $10 million to $20 million a year. Wall says the state spent more than $137 million on prescription drugs last fiscal year.

Representatives from about a dozen states, including Louisiana, recently met in Atlanta with representatives from five Canadian drug companies. Wall says his office is waiting to see how other states deal with safety and legal issues before charging ahead--if the Blanco administration says OK, that is.

Despite resistance from federal agencies, popular momentum is building behind the wider importation of Canadian drugs, Wall says.

"Based on everything I see it's just a matter of time before this happens. Of course we'll have to wait on the new administration and see what type of position they're going to take."

Drug companies argue that research and development of new drugs is extremely expensive and that increased imports from Canada only end up hurting the consumer. Wall concedes research and development is expensive but counters that drug companies also spend an excessive amount of money on marketing.

"There's just no way they can justify the different pricing structures between Canada and the United States," says Wall, "because it's just too important to the individuals who need these drugs."

NORTH VS. SOUTH

A sample comparison of U.S. and Canadian prescription drug prices:

Name       Dosage   Quantity   U.S. price   Canadian price *

Celebrex   100mgs      30         53.59           35.22
Lipitor     20mgs      30        107.99           11.21
Paxil       20mgs      30         92.59           64.12
Prevacid    30mgs      30        134.99          $73.23

* In U.S. dollars. Sources: www.cvs.com, wwwcanadameds.com

STEVE CLARK corms health care, higher education, environment and transportion. Reach him at sclark@businessreport.com.

COPYRIGHT 2004 Louisiana Business, Inc.
COPYRIGHT 2004 Gale Group